The government has announced via the Queen's speech that from 2010 councils will be allowed to charge an extra 2p on the national business rate to promote economic development in their area.

The government's Lyons report recommended the action, saying that it would be a ‘vital tool for councils to promote long-term economic growth, working with local business and the local community'.

With many businesses struggling the timing of the announcement has been criticised, and there are fears that councils could use the extra money to account for their spending deficit.

"Now is not the time to bring in new powers to raise tax more widely from business," said John Cridland of the Confederation of British Industry.